Measuring Real Exchange Rates Misalignment In Sudan (1979-2007s).

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Date
2015-06-15
Authors
Babiker Mohammed Babiker, Abd Allteef
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Publisher
UOFK
Abstract
The present study focuses on the estimation of real exchange rate misalignment in Sudan. Different approaches to estimate equilibrium real exchange rates were followed for the purpose of measuring Sudan\\\\\\\'s real exchange rates misalignment during the period (1979-2007s). The study tends to explain why the local currency is actual exchange rate, converges or diverges from its equilibrium rate, which intuitively reflects measurement of overvaluation and undervaluation of the currency. Sudan’s exchange rate performance during the period under study were analyzed, the results had shown divergence between nominal and real exchange rate throughout, the three phases; phase one ( 1979-1991), which was relatively lower than the discrepancy between nominal and real exchange rate in the second phase (1992-1998) in the third period 1999-2007. The average nominal exchange rate in the first period had been devaluated by 15% while real exchange rate also had shown depreciation by 11%. On the other hand; nominal exchange rate in the second period had depreciated by 19% .While real exchange rate depreciation was 12% Phase three is reflecting after oil exportation, i.e. since 1999-2007, the exchange rate had recorded relative stability and slight appreciation both in nominal and real exchange rates the appreciation reported 20% and 10% respectively. Three approaches to measure the real exchange misalignment were applied; namely the purchasing power parity, the monetary approach, and behavioral equilibrium exchange. The results had shown real exchange rate misalignment during The first period which on average reached 303% .On the other hand real exchange rate misalignment during the second period had shown 282%while in the third period real exchange rate misalignment was 195%, which indicates overvaluation of the domestic currency during the first period and overvaluation of domestic currency in the second and third periods respectively. Real exchange rate misalignments (as well as its volatility) can influence the country\\\\\\\'s economic performance. The misalignment is used as indicator of government intervention in the economic activity. Based on the results obtained, the study recommended that to target the lowest degree of exchange rate misalignme
Description
92page
Keywords
Measuring Real Exchange,Rates Misalignment,Sudan
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